Table of Contents
New Registration Procedure under section 12AB Deferred and Extended to 01st April 2021 from 31st December 2020
The new registration procedure prescribed under section 12AB for Charitable Trusts and other related provisions as introduced by the Finance Act, 2020 has been deferred and extended to April 1, 2021 by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Both the renewal of registration u/s 12A or section 12AA, as well as renewal of approval under section 80G, is being deferred.
The new registration procedure prescribed under section 12AB was supposed to be rolled out from 01.06.2020 and end by 31st August 2020, which was deferred and extended to 01.10.2020 and end by 31st December 2020 but considering the current pandemic situation, it has been further extended to 01.04.2021 and hence now all existing trust have to re-register themselves under section 12AB from 01.04.2021.
Finance Act, 2020 rationalized the procedure relating to approval/ registration/ notification of certain entities referred to in sections 10(23C), 12AA, 35 and 80G of the Act, with effect from 1st June 2020. As per the new procedure, the entities already approved/ registered/ notified under these sections would be required to file intimation within three months, i.e, by 31st August 2020. Further, the procedure for approval/ registration/ notification of new entities has also been rationalized with effect from 1st June 2020.
Initially, these amendments related to the new registration procedure for charitable trusts and other institutions were introduced from 01.06.2020 by the Finance Act, 2020.
However, in view of the unprecedented humanitarian and economic crisis due to COVID-19 pandemic and the resultant nationwide lockdown, the CBDT had decided to defer the implementation of the new procedure for approval/ registration/notification of certain entities to 1st October 2020. Accordingly, the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act, 1961 (the Act) would be required to file intimation within three months from 1st October 2020, i.e, by 31st December 2020. Further, the amended procedure for approval/ registration/ notification of new entities was also deferred till 1st October 2020. This was stated by the CBDT in a press release dated 09.05.2020. However, no legislative amendments were carried out.
The legislative amendments were introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 which has further extended the new registration and other procedure under section 12AB and other sections to 01.04.2021. These amendments were carried out in all the related provisions which were introduced by the Finance Act, 2020. Hence, the new provisions related to charitable trusts and other institutions shall now apply from the financial year 2021-22.
For this purpose, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has to amend the related provisions in a two-way manner. Firstly, the amendments in this Act have withdrawn all the amendments made by the Finance Act, 2020 in the Income Tax Act, 1961. Since the provisions of Finance Act, 2020 was notified on March 22, 2020, it becomes necessary to roll back the amendments so far introduced in the Income Tax Act. This has brought all the relevant provisions to the pre-amended position.
Secondly, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has amended the Income Tax Act to introduce all these amendments from April 1, 2021.
The Government notified the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 on 29 September 2020 after receiving the President of India’s assent. The Act seeks to enact legislative amendments in direct and indirect tax laws which were introduced by the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 as a COVID-19 pandemic relief measure. It also legislates subsequent relaxations provided vide the Ordinance and Notification/Press Releases.
The Finance Act, 2020, introduced the concept of a new procedure for registration of all existing and new charitable trusts and institutions under section 12AB of the Income Tax Act, 1961.
To continue claiming exemption, existing registered charitable trusts and institutions were required to apply for fresh registration within three months from the date this section was made effective. Initially, the section was effective from 01.06.2020, which was later deferred to 01.10.2020. Hence, the new registration and approval procedures need to be completed by 31.08.2020/31.12.2020. Similar provisions were also introduced for renewal of 80G certificates and filing of statements of donations and issue of certificates to donors which were initially made effective from 01-06-2020 and then deferred to 01-06-2020.
To provide further relief to taxpayers given the continuing pandemic, the applicability of new provisions for registration/re-registration under section 12AB have been deferred to 01-06-2021.
Charitable trusts and institutions seeking fresh registrations until 31-03-2021 can make an application under the existing provisions of section 12AA. From 01.04.2021, the application for registrations will have to be made under section 12AB of the Act. Registered trusts and institutions would be required to apply for re-registration under section 12AB of the Act in FY 2021-22 on or before 30.06.2021.
Similarly, amendments made vide the Finance Act, 2020, in sections 35 and 80G of the Act for intimation, filing statements before the income-tax authorities and furnishing certificates to donors, etc., with effect from 1st June 2020 are deferred to 01.04.2021.
The Amendments To Each Of the Provisions Are Discussed Below :
Related sections viz. 10(23C), 11, 12A, 12AA, 56(2), 115BBDA, 115TD and 253 under the Act have been re-modified such that pre amended provisions (i.e. provisions prior to amendments made vide the Finance Act, 2020) will continue.
However, the provisions related to charitable trusts viz, section 12A and section 12AA, section 12AB, section 56, section 80G and section 271K are only discussed below. Similar amendments were also made for section 35, etc.
| Section | Amended Provisions | Amendments & Effective Date | Remarks |
| Sec. 12A | Clause (ac) of Sub-section (1) | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission, clause (ac) was inserted by the Act No. 12 of 2020, w.e.f. 1-6-2020. |
| Inserted w.e.f. 01-04-2021 | Re-introduced from 01-04-2021 | ||
| “First Proviso” to sub-section (2) | Omitted w.r.e.f 01-06-2020 | “First Proviso” omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission, first proviso was amended by the Act No. 12 of 2020 w.e.f. 1-6-2020. | |
| “Second Proviso” to sub-section (2) | Amended w.r.e.f. 01-06-2020 | This now becomes the first proviso of section 12A(2). Reference to section 12AB omitted. | |
| “Third Proviso” to sub-section (2) | Amended w.r.e.f. 01-06-2020 | The existing third proviso has now become the second proviso and hence ‘”provided also” is substituted with “provided further”. | |
| “Fourth Proviso” to sub-section (2) | Amended w.r.e.f. 01-06-2020 | Reference to section 12AB omitted. | |
| “First Proviso” to sub-section (2), after the amendment by this Act | Amended w.e.f. 01-04-2021 | Time-limit for applicability of exemption upon migration to new registration regime. | |
| “Second Proviso” to sub-section (2) | Amended w.e.f. 01-04-2021 | The existing second proviso will become the third proviso and hence “provided further” is substituted with ‘”provided also”. | |
| “Fourth Proviso” to sub-section (2) | Amended w.e.f. 01-04-2021 | Reference to section 12AB inserted. | |
| Sec. 12AA | Sub-Section (5) | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission sub-section (5) was inserted by the Act No. 12 of 2020 w.e.f. 1-6-2020. |
| Inserted w.e.f. 01-04-2021 | This relates to Non-applicability of provisions of section 12AA. Earlier it was amended that the provisions of section 12AA would not apply from 01.06.2020. Now it has been amended to make it applicable from 01.04.2021. Thus, provisions of section 12AA will apply from 01-04-2021 and not from 01-06.2020. | ||
| Sec. 12AB | Entire Provisions | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission section 12AB was inserted by the Act No. 12 of 2020 |
| Inserted w.e.f. 01-04-2021 | This relates to procedure for fresh/new registration of a trust or institution. Earlier it was amended that the provisions of section 12AB would apply from 01.06.2020. Now it has been amended to make it applicable from 01.04.2021. Thus, provisions of section 12AB will apply from 01-04-2021 and not from 01-06.2020. | ||
| Sec. 56 | Clause (v), Clause (vi), Clause (vii) and Clause (x) of Sub-Section (2) | Omitted w.r.e.f 01-06-2020 | Reference to section 12AB omitted. |
| Inserted w.e.f. 01-04-2021 | Reference to section 12AB inserted. | ||
| Sec. 80G | In sub-section (2), in clause (a), in sub-clause (iiia) | Inserted w.e.f. 01-04-2020 | PM CARES FUND included for 100% deduction without any limit |
| Clauses (vi) of sub-section (5) | Amended w.e.f. 01-06-2020 | Approval procedure amended and the provision as it stood prior to 01.06.2020 reintroduced. | |
| Clauses (vi) of sub-section (5) | Amended w.e.f. 01-04-2021 | Approval procedure amended and the provision as it stood as on 01.06.2020 introduced. | |
| Clauses (viii) and (ix) of sub-section (5) | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to their omission clauses (viii) and (ix) were inserted by the Act No. 12 of 2020 w.e.f. 1-6-2020. | |
| Clauses (viii) and (ix) of sub-section (5) | Inserted w.e.f. 01-04-2021 | Clause (viii) relates to furnishing of a statement of donation received from donors. Clause (ix) relates to furnishing certificates of donation to donors. | |
| Earlier these provisions were introduced by FA, 2020 to apply from 01.06.2020. Now it has been amended to make it applicable from 01.04.2021. Thus, these provisions will apply from 01-04-2021 and not from 01-06.2020. | |||
| Further, the procedure for obtaining approval in case of an approved fund is deferred to 01.04.2021. These provisions related to fresh approval will now be applicable from 01.04.2021 instead of 01.06.2020 introduced earlier vide Finance Act, 2020. | |||
| Sub-section (5E) | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission sub-section (5E) was inserted by the Act No. 12 of 2020 w.e.f. 1-6-2020. | |
| Inserted w.e.f. 01-04-2021 | This relates to applicability of new approval provisions for pending approval application as on 01.04.2021. | ||
| Explanation 2A | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission sub-section (5E) was inserted by the Act No. 12 of 2020 w.e.f. 1-6-2020. | |
| Inserted w.e.f. 01-04-2021 | This relates to allowability of deduction for donation to donors on the basis of information furnished to income tax authority. | ||
| Sec. 115BBDA | Omitted w.r.e.f 01-06-2020 | Reference to section 12AB omitted. | |
| Inserted w.e.f. 01-04-2021 | Reference to section 12AB inserted. | ||
| Sec. 271K | Entire Provisions | Omitted w.r.e.f 01-06-2020 | Omitted by the Act No. 38 of 2020, w.r.e.f. 1-6-2020. Prior to its omission section 271K was inserted by the Act No. 12 of 2020 w.e.f. 1-6-2020. |
| Inserted w.e.f. 01-04-2021 | This relates to imposition of penalty for failure to furnish statement of donations u/s 80G(5)(viii) or failure to furnish certificate u/s 80G(5)(ix), section 35, etc. |
Deferment of provisions for new registration procedure of Charitable Trusts and Institutions u/s 12AB
Finance Act, 2020 has prescribed a new registration procedure for Charitable Trusts and Institutions under section 12AB. Existing registered trusts or institutions were required to migrate to the new registration regime u/s 12AB from 01-06-2020 to 31-08-2020. However, due to the outbreak of COVID-19 and the subsequent nation-wide lockdowns, the date of applicability of section 12AB was extended to 01-10-2020 instead of 01-06-2020.
It was further provided that provisions of section 12AA shall not apply from 01-06-2020. This amendment is now withdrawn from the Finance Act, 2020 and made applicable from 01-04-2021.
The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has, however, withdrawn the amendments introduced by the Finance Act, 2020 and re-introduced the same and made it applicable from 01-4-2021. Hence, all the provisions as was applicable to the Trusts and institutions before the amendment by the Finance Act, 2020 were restored and will continue till 31-03-2021. In other words, the old regime of registration procedure will continue till 31-03-2021.
Consequently, references of section 12AB in section 115TD, section 115BBDA and section 56 have been omitted and is introduced from 01-04-2021. The Finance Act, 2020 amended Section 56(2)(x) w.e.f. 01.06.2020 to provide that the amount received by an individual or a HUF from any trust or institution registered under section 12AB of the Act shall not be deemed as ‘Income from other sources’. This provision is now deferred to 01.04.2021. Finance Act, 2020 amended section 115BBDA to exclude any trust or institution registered under section 12AB from the list of the specified assessees being subjected to the tax at 10% on dividend income exceeding Rs. 10 lakh in aggregate.
Furnishing statement of donations under section 80G postponed
The Taxation Act has amended section 80G to insert a new clause (viii) to sub-section (5) of section 80G to provide for furnishing a statement of donations received from the donees to the income-tax authority in the prescribed form and within the prescribed time limit. This amendment shall now take effect from 01-04-2021. Further, such trust or institutions has to furnish certificates to the donors in the prescribed manner w.e.f. 01-04-2021 as against 01-06-2020.
This amendment was originally introduced by the Finance Act, 2020 but now has been deferred till 01-04-2021. Consequently, the penalty provisions have also been deferred till next year.
